The top four audit firms of the United Kingdom are facing a market share cap in order to encourage competition from smaller firms as the sector comes under heightened scrutiny after a number of high profile corporate collapses.
Sky News reported that the Competition and Markets Authority (CMA) is anticipated to recommend to impose a limit on the number of large listed companies that the so-called Big Four – EY, Deloitte, PricewaterhouseCoopers (PwC), and KPMG and – can audit, as well as a joint audit model.
The recommendations, however, will be announced next week after a two-month market study. It will stop short of demanding a break-up of the dominant companies even though the CMA could leave the idea open as one of its backup options.
The sector was conducted regarding the role of auditors during the failure of Carillon, a construction giant, and department store BHS, which were both signed off as going concerns prior to their collapse.
Recently, accountants have been questioned regarding their involvement with firms such as Patisserie Holdings and Ted Baker.
The introduction of joint audits would have a smaller rival company working alongside one of the dominant four on the accounts of large firms.
A spokesperson from the CMA stated: “Our investigation is ongoing. Any reporting ahead of the publication of our provisional findings is speculation.”